Lease Auditing & Administration Services
Capital Real Estate Partners offers significant background in helping clients and attorneys to create better leases that are simpler, clearer and confirmable with respect to cost and the pass through of operating expenses, space measurement and other key economic factors. Well drafted leases reduce tenant cost and make confirmation of these costs during the term of the lease much more efficient and accurate.
Many businesses pay more than required under their lease agreements. Capital Real Estate Partners helps companies to reduce unnecessary lease costs and often recapture monies that have been overpaid. A lease audit will determine if there have been errors in the calculation of rent or other charges assessed to a tenant. Because leases are often complex, and landlords often have many properties and tenants to invoice, there are many components of expenses and formulas that are subject to error. We perform an exhaustive evaluation of:
- Base Rent Charges
- Operating Expense Escalations
- Real Estate Tax Escalations
- Common Area Maintenance Pass-Throughs
- Electric and Other Utility Charges
- CPI Increases
- Marketing & Promotional Charges
- Space Measurement
- Facility/Property Management Practices
- Concessions or benefits made for other tenants
Our process consists of three easy steps:
- Internal Evaluation: Review of the lease, rent, and expense formulas; Review of exception or limit clauses or agreements; Site inspection and measurement; Comparison of costs to industry norms and GAAP.
- Landlord Review: Meet to discuss tenant concerns; Explain the cost calculations; Request for additional information if necessary; Develop a strategy to recover costs.
- Recovery and Conclusion: Negotiate any disputed amounts; Establish agreement detailing timing and recovery items; Finalize documentation.
If discrepancies are found, we will oversee a settlement or recovery of monies paid and a reduction in future amounts due under the terms of the lease. Results are verified by a CPA to assure financial accuracy. The entire process is handled in a professional manner which preserves landlord and tenant relations.
Mortgage Brokerage Services
The biggest benefit of mortgage brokers – whose fee is almost always paid in large part by the financial institution providing the loan – is that they can offer borrowers a wider choice in rates and terms than the client might be able to get from their original lender or by searching for a new lender on their own. The key to this service is not just getting financing for a particular project for an owner; its getting the financing that mirrors the specific goals and objectives the owner has for the property. We think this service is a critical offering for our owner clients, and are confident we can offer tremendous value during the financing or re-financing process.
It’s critical that the best financial and analytical thinking be applied to decision-making with regard to sale, lease and investment transactions. After identifying clients’ cash flow, accounting and tax goals, and prospective key issues, the Financial Analysis group offers strategies for achieving optimal financial results. We can assist in financial modeling and analysis; sensitivity analysis; objectively evaluating best alternatives using sound financial tools; procvide lease vs. purchase analysis; and/or identifying the major financial statement and income-tax accounting implications of proposed transactions.
Market Rate Audits
Many corporations do a great job negotiating leases and locking in the best available rental rates – and then forget about them until the next time that the lease comes due.
Often, there is significant savings potential locked inside of these leases that can be realized if the leases are renegotiated and brought to current terms.
The recent collapse of the financial markets has greatly impacted commercial rents, providing attractive lower rates for office and industrial tenants. What many companies fail to realize is that these leases can often be “refinanced” though restructuring and brought to the current lower rates.
Capital Real Estate Partners provides Market Rate Audits to determine the unlocked savings potential.
We will analyze:
- Scheduled Rents
- Market Rates
- Market Concessions
- Landlord Profile
- Landlord Financial Status
- Space Absorption and Construction Trends
- Landlord Compliance with Lease Terms
- Options to Terminate, Expand, or Renew
- Project Vacancy and Offered Rates
- Adjacent Tenants Profile/Status
Our first action is to review all criteria to quantify the savings potential and rate the probability of capturing those dollars. To view a sample analysis, please see the Market Opportunity Projection.
Next, we’ll meet with you and your staff to determine the corporate objectives for each location and consider opportunities to upsize or downsize and the future anticipated requirements for each site. Based on these findings we’ll prepare a Market Strategy Report and confirm with you the best action for each location. If the timing or situation is not right for a renegotiation of a particular lease, we will tell you so.
With your approval, we’ll then meet or talk with each landlord to determine the flexibility and willingness to restructure the lease for immediate benefit to your firm. We’ll follow through to assure all documentation is completed to your satisfaction.
Capital Real Estate Partners provides all of the above services on a complete contingent fee basis. Typically we are compensated by sharing in the fee payable by the landlord to their own broker for lease extensions beyond the present term. In cases where a lease extension does not occur, or a significant reduction in space occurs, we can arrange to be paid as a percentage of negotiated savings at your discretion.
Merger & Acquisition / Due Diligence
Mergers and Acquisitions (M&A) provide the legacy by which every management team is remembered. They require fast and accurate due diligence in a multitude of disciplines to develop and implement a successful integration and transition plan.
Real estate problems discovered subsequent to the transition lead at best to a loss of flexibility and, at worse, the loss of millions of dollars and a huge economic risk to the firm. Acquiring companies often attempt to perform much of the detailed due diligence and planning utilizing their existing staff. In such cases, financial, marketing, human resources, and operating personnel are assigned “special projects” to be accomplished in addition to running the company. This often creates an unnecessary burden at a critical transition period for the new firm.
M&A integration consultants are unlikely to provide detailed information and analyses regarding real estate positions of the acquired company, and lack the real estate based experience to accurately determine sublease values, time to market, and rights contained within complex lease agreements.
Capital Real Estate Partners will help you create a detailed integration plan with respect to sales offices and warehouse distribution centers considering those factors and timed to leverage lease expiration dates and renewal or expansion rights. For companies looking to create a restructuring plan, our financial staff will provide all reference materials necessary to meet auditing requirements.
Real estate lease and ownership transactions are complex. Combining this complexity with the understanding of the property and its position in diverse real estate markets and sub-markets is a job for the real estate and fixed asset consulting specialists of Capital Real Estate Partners.
We help you get your arms around the many moving parts that tie operations to real estate. Capital Real Estate Partners helps clients to create accurate, timely, and profitable integration strategies.
Early Renewal and Lease Renegotiation
Renegotiating a lease agreement often provides the single greatest opportunity for a business to immediately reduce recurring operating costs. The amount of savings available is determined by market conditions and the ability of the business to leverage future leasing revenue to achieve cost reductions today.
Capital Real Estate Partners focuses on early renewal strategies to improve value for our clients and lock in low rates when the real estate market is weak.
Lease renegotiations also provide opportunities to improve value by:
- Structuring new financing terms to reduce costs and minimize future risk.
- Using design best practices to improve space efficiency and utilization.
- Value engineering of construction requirements to gain best value from tenant improvement allowances.
Requesting a proposal for an early renewal, far in advance of a lease expiration, places our client in a position of power. The landlord’s response draws the line in the sand and reveals the worst-case rent scenario. All future negotiations work down from that point. Acting early, the client always retains the option of determining that the offer is not quite good enough, placing further pressure on landlord pricing.
Competition adds another layer of negotiating strength. By starting early, opportunities to purchase property, build-to-suit facilities, and leases with other landlords who can plan and assemble space become alternatives that may offer better pricing.
In today’s volatile business markets, space requirements can expand or contract on short notice. Sometimes changes in strategy, financial downturns or individual company crises occur that render the need for a particular facility obsolete.
Today’s businesses demand rapid, cost-effective, and practical solutions to dispose of excess real estate and to return on investment.
Capital Real Estate Partners takes a strategic approach to real estate and facility assets in corporate turnaround and renewal situations and offers clients downsizing strategies, lender workouts, non-judicial restructuring, and bankruptcy solutions.
We provide Value Based Metric Systems development and implementation to accurately gauge the value to the company of each leased or owned real estate asset and to allow quantitative evaluation of the market value of each asset.
Our Market Research Team provides competitive market value assessment for all types of business property including retail, office, manufacturing and industrial distribution. Capital Real Estate Partners accomplishes this through in-house research, its national network, and access to fee appraisers coast-to-coast.
Capital Real Estate Partners provides a quick response team for sublease dispositions. Unused and inefficient assets can be rapidly subleased at non-distressed rates in all markets nationwide through a number of alternative disposition methods designed to bring maximum value based upon your critical time schedule. We provide you with a single point of contact to manage all disposition progress.
Whether you need to dispose of a single location or a portfolio of properties, we can help you to reach the greatest number of potential buyers. By marketing to both users and tenant brokers with an aggressive marketing strategy, Capital Real Estate Partners delivers maximum return on to eliminate or restructure your lease.
Green Facility Consulting
In a time when natural resources are being depleted at an alarming rate, we believe that responsible companies should seek out new ways to reduce their impact on the environment. It is not only good corporate stewardship, it can also be good for employee satisfaction, productivity, and long term profitability as well.
Capital Real Estate Partners assists corporations seeking to incorporate sustainability into their real estate strategy. In doing so, our clients are lessening their impact on the environment while achieving cost savings through reduced utility demands, building maintenance expense reductions, and improved efficiency.
We’ve partnered with some of the best LEED® accredited design professionals in the country to identify opportunities to incorporate eco-friendly materials and energy saving devices into both new construction and retro-fit of existing properties.
Whether your intent is to simply make environmentally smart choices related to construction and finishes, or to achieve a LEED® certification rating from the US Green Building Council, Capital Real Estate Partners is there to help you find innovative, flexible, and comprehensive solutions.
By the way, as Capital Real Estate Partners is committed to reducing our use of laser printing, inks, and paper. We operate as a “paperless” company. That is why all of our marketing information is available only online rather than in print and all of our documents are created, stored, sent, and reviewed electronically.
In today’s fast-paced and technology-driven market, your ability to compete is not a function of being big or small, but being fast or slow. By measuring the time and motion of each component of your distribution process, you can identify internal best practices implemented by your own quality people.
The design and selection of your facility is perhaps the most critical variable in the fulfillment process. Capital Real Estate Partners helps you consider macro (external) analysis such as:
- Strategic geographic placement to market coverage
- Impact of labor and energy costs
- Economic incentives, state income and inventory tax, foreign trade zones
- Demographic and competitor analysis
And we’ll perform a micro (internal) analysis to consider:
- Inventory profiling and analysis by activity zone of your present and projected operations
- Inherent efficiency of warehouse height, column spacing, and dimensions of available options
- Warehouse layout and pick zone design options
- Cost/benefit analysis of alternative picking methods
- Slotting and replenishing strategies
- Material handling equipment and fixtures
Capital Real Estate Partners utilizes a proprietary state-of-the-art decision analysis system to create a custom Overall Distribution EffectivenessTM (ODETM) business process measurement tool.
ODETM is a comprehensive methodology for synchronizing supply chain initiatives with day-to-day operational requirements. ODETM implements proven strategies expanded from Six Sigma, OEE, TPM, and other internationally known principles to deliver:
- A method of ranking and rating existing facility and real estate infrastructure,
- A system for measuring the distribution performance of each facility against a common denominator, and
- The ability to improve the performance of each site once selected.
The ODETM will provide a tangible system of measurement to deliver cost-effectiveness as a standard operating methodology. ODETM is completely scalable and will assist in developing a systematic road map for reducing time and constraints in your distribution system. By integrating best practices with world-class facility design, you’ll create distribution centers that give your firm a true competitive advantage.
Metrics & Benchmarking
Are you good at managing your corporate assets? Whatever your response, our next question is: How do you know?
If you are not measuring it, you are not managing it. Every business has a set of metrics – Key Performance Indicators – that tell a story. The story line relates Total Occupancy Costs (TOC)* to corporate strategic goals to create shareholder value. It also measures less tangible values such as flexibility, time to market, corporate approval processes, and standardization values.
Here are the five questions that every business executive should know:
- What are your most/least efficient facilities and what makes them so?
- What is your true cost of facilities (including all related furniture, fixtures, equipment, and technology costs)? Express as a percentage of your total operating expense.
- What is your TOC cost/unit (manufacturing), cost/seat (service), or cost/pallet position (distribution)? What percentage of this cost is spent on unutilized space?
- How do the above numbers compare to your competitors?
- Are your service providers applying best practices to provide you with a competitive edge? How do you know?
The Capital Real Estate Partners Dynamic Scorecard® provides real time benchmarking and forecasting tools that measure your success – and improved value. It consists of both historical and forward projections, benchmarked internally and externally against peers in your industry. This system allows you to measure, and react to, changes in your business and facility requirements.
*Total Occupancy Costs include all cash costs (rent, maintenance, property taxes, insurance, etc.) as well as amortization and depreciation (improvements, furniture, fixtures, and equipment including related communications and technology), typically used to calculate EBIT returns.
Workspace Design and Efficiency
Few activities within the control of a corporate real estate group can add as much value and direct savings to the bottom line as smart design.
Capital Real Estate Partnes assists clients in looking within your own organization for design excellence, and to identify outside strategies and ideas that will reduce square footage and improve efficiency.
Our design team will help you to discover solutions that:
- Provide the most efficient utilization of space, both horizontally and vertically
- Plan for flexibility to meet changing business requirements
- Improve process flow for better throughput and communication
- Maximize ROI on construction alternatives and value engineering
- Utilize green building methods for improved quality and responsible environmental stewardship
- Seek competitive advantages over competition
- Establish corporate standards and performance specifications for your real estate portfolio
If you are contemplating a project and want to control the process beyond traditional methods, give us a call.
Corporate management teams often have neither the time nor the inclination to evaluate every aspect of their facility transactions. That’s why Capital Real Estate Partners does it as part of the total financial analysis, offered in clear, concise, and easy-to-digest language.
We realize that every corporation is unique. That’s why we analyze all lease, sublease, buyout, purchase, build-to-suit, and lease vs. purchase proposals individually, and according to the specific circumstances of the transaction and the objectives of management.
There are four areas of cost reduction that present opportunity for value in almost every corporation:
Accounts Payable Reconciliation
If your A/P department pays landlord invoices without verifying lease provisions and competitive charges, you have almost certainly overpaid. We assist you in recovery and avoidance of future overcharges.
Because most utility services are not provided in a competitive bidding arrangement, opportunity exists to both reduced rates and usage. Every energy consuming device or piece of equipment has a cost/benefit value over it’s life. We’ll evaluate your facilities and assist in cutting costs.
Operating Expense Audits
Capital Real Estate Partners conducts lease reviews to verify compliance with the space measurement standards set forth by the American National Standards Institute (ANSI), and Building Owners and Managers Association (BOMA). Also, many landlords make liberal interpretation of operating expense pass-through provisions. Our audit group assists in operating a professional process to verify allowable charges in a way that preserves good landlord relations.
Property Tax Consulting
Taxes are based upon an appraiser’s opinion of value. Municipalities often apply a formula of historic values to create this estimate. We evaluate the estimate against other comparable properties and assists clients in verifying or, if appropriate, challenging and reducing tax assessments.
Corporate portfolios are measured using our Dynamic Scorecard System® to benchmark internal and external metrics. Our sophisticated modeling tools allow us to show the full impact of occupancy costs, depreciation, and amortization of company EBIT and shareholder value.
Capital Real Estate Partners’ Business Intelligence™ research services are designed to provide you with a wide range of comprehensive data such as:
- Demographic studies
- Customer and prospect identification and plotting
- Competitor facilities and analysis
- Zoning and land use potential
- Industry benchmarking
- Economic incentive comparisons
- Tax and trade studies
- Permitting and local code requirements
- And, many more requirements for corporate users
With a dedicated research department, we offer in-depth fact finding that you won’t get from other sources. Research is a core competency for us, allowing us to get you complete information and to do it fast.
Do you need some answers? Call us today.
General Real Estate Consulting
We provide a broad spectrum of specialized real estate services to our clients, including:
- Strategic consulting on real estate matters;
- Outstanding market knowledge based on detailed market research;
- Use of strong negotiating skills to benefit our clients;
- Provide complete design and construction-consulting services geared to our clients needs.
Expert Witness Testimony